Shepherd Chemical Company (Board decision, September 27, 2024)

Plain-English summary

Shepherd Chemical Company voluntarily disclosed that it had manufactured a chemical substance identified in the order as Chemical A before submitting a required pre-manufacture notice. EPA alleged that Chemical A was not on the TSCA Inventory when it was manufactured, and the company agreed to resolve the alleged violation under TSCA section 5. The Consent Agreement set a civil penalty of $29,688 and allowed the company or its distributor to process, use, and distribute existing stocks of Chemical A under the conditions of EPA's PMN review and determination. The EAB ratified the agreement, made it effective immediately, and ordered Shepherd to comply with all of its terms.

Decision snapshot

• Cited authorities: TSCA §§ 3, 5, 8, 15, and 16; 15 U.S.C. §§ 2602, 2604, 2607, 2614, and 2615; 40 C.F.R. §§ 13.11, 22.18, and 720.3, 720.22, 720.40, and 720.102; 31 U.S.C. § 3717
• Outcome: The Consent Agreement was ratified, Shepherd Chemical Company was ordered to comply with its terms, and a $29,688 civil penalty was approved.
• Key point: Manufacturing a new chemical substance before submitting the required PMN can result in a civil penalty and settlement conditions governing existing stocks.

Full text (EPA EAB public release)

                                                                      F I L E D
                                                                          Sep 27, 2024
                                                                     Clerk, Environmental Appeals Board
                                                                     INITIALS ________________________
                 ENVIRONMENTAL APPEALS BOARD
        UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                        WASHINGTON, D.C.

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In re Shepherd Chemical Company ) Docket No. TSCA-HQ-2024-5008
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                                   FINAL ORDER

   Pursuant to 40 C.F.R. § 22.18(b)-(c) of EPA’s Consolidated Rules of Practice, the

attached Consent Agreement resolving this matter is incorporated by reference into this Final Order and is hereby ratified.

    The Respondent is ORDERED to comply with all terms of the Consent Agreement,

effective immediately.

   So ordered.1
                                                 ENVIRONMENTAL APPEALS BOARD

Date: September 27, 2024 By: ________
Ammie Roseman-Orr
Environmental Appeals Judge

1
The three-member panel ratifying this matter is composed of Environmental Appeals Judges Aaron P. Avila, Wendy L. Blake, and Ammie Roseman-Orr.

BEFORE THE ENVIRONMENTAL APPEALS BOARD UNITED
STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C.

In the Matter of:

Shepherd Chemical Company
Norwood, OH

Respondent

Docket No. TSCA-HQ-2024-5008

                          CONSENT AGREEMENT

Complainant, United States Environmental Protection Agency (hereinafter “EPA” or “Agency”), and Respondent, Shepherd Chemical Company (“Shepherd”) (collectively, the “Parties”), hereby enter into this Consent Agreement and proposed Final Order before the taking of any testimony and without adjudicating of any issues of law or fact, consent to the terms of this Consent Agreement and attached Final Order.

                        PRELIMINARY STATEMENT

1. This civil administrative proceeding for the assessment of penalties pursuant to section 16(a) of
   Toxic Substances Control Act (“TSCA”), 15 U.S.C. § 2615(a), as amended by the Frank R. Lautenberg Chemical Safety for the 21st Century Act, Pub. L. No. 114-182, June 22, 2016, 130 Stat 448 (2016 Act), is being simultaneously commenced and concluded pursuant to the Consolidated Rules of Practice Governing the Administrative Assessment of Civil Penalties, and the Revocation, Termination or Suspension of Permits (“Consolidated Rules”), 40 C.F.R. Part 22.

2. On or about June 29, 2023, Respondent voluntarily disclosed to the Agency potential
   noncompliance with TSCA requirements of a manufactured chemical substance. They discovered that chemical identity in a Pre-manufacture Notice (PMN) they had already submitted had been misidentified. Respondent has claimed the identity of the chemical as TSCA confidential business information (CBI), which is herein referred to as Chemical A. Respondent then sought authorization to release their existing stocks of Chemical A.

3. EPA has determined that the disclosure described in Count I qualifies for reductions applicable
   under the TSCA Section 5 Enforcement Response Policy, issued August 5, 1988, as amended June 8, 1989, and July 1, 1993 (TSCA ERP).

4. On or about August 15, 2023, Respondent submitted a new Premanufacture Notice (PMN) for
   Chemical A, which is not on the TSCA inventory.

5. The Parties’ discussions have resulted in the agreement contained herein, which includes terms
   for the release of their existing stocks.

6. To avoid the disruption of orderly business activities and the expense of protracted and costly
   litigation, Respondent, for purposes of this proceeding only and as required by 40 C.F.R.
   § 22.18(b)(2):

a. admits the following jurisdictional allegations and waives any defenses to jurisdiction:

  i. Respondent is a corporation located at 4900 Beech Street, Norwood,
  Ohio 45212 and is a “person” as defined in 40 C.F.R. § 720.3(x) and, as such,
  is subject to TSCA and its regulations; and

  ii. Respondent manufactures, processes, and distributes in commerce, a
  chemical substance identified as Chemical A or mixtures containing this
  chemical, or in the past has manufactured, processed, and distributed in
  commerce Chemical A or mixtures containing this chemical as those terms are
  defined in sections 3(2), (5), (9), (10), and (13) of TSCA, 15 U.S.C. § 2602(2),
  (5), (9), (10), and (13) respectively, and 40 C.F.R. § 720.3(e), (i), (q), (u), and
  (aa). Respondent is subject to TSCA, and the regulations promulgated
  thereunder.

b. neither admits nor denies the specific factual allegations contained herein;

c. consents to the assessment of a civil penalty on the terms discussed below;

d. consents to any conditions specified in this Consent Agreement;

e. waives any right to contest the alleged violations of law set forth herein; and

f. waives the rights to appeal the proposed Final Order accompanying this Consent Agreement.

                   II. EPA'S FINDINGS OF FACT AND LAW

                     COUNT I – TSCA § 5(a)(1) VIOLATIONS

7. Any chemical substance that is not included in the chemical substance list compiled and
   published under section 8(b) of TSCA, 15 U.S.C. § 2607(b) (“TSCA Inventory”), is a “new chemical substance,” as defined under section 3(11) of TSCA, 15 U.S.C. § 2602(11) and 40 C.F.R. § 720.3(v).

8. Section 5(a)(1) of TSCA, 15 U.S.C. § 2604(a)(1), and 40 C.F.R. §§ 720.22(a)(1) and 720.40(b),
   provide that no person may manufacture (import) a new chemical substance unless such person submits a PMN to EPA at least ninety (90) calendar days before manufacturing that substance.

9. On June 29, 2023, and October 17, 2023, Respondent informed EPA that it had manufactured
   Chemical A between 2020 and 2023 on at least 2 occasions (with relevant dates and quantities claimed as CBI) prior to submitting a new PMN for this Chemical after new information about the substance’s chemical structures was identified.

10. Chemical A was not included on the TSCA Inventory at the time of manufacture, and therefore,
    is a “new chemical substance” as defined under section 3(11) of TSCA, 15 U.S.C. § 2602(11) and 40 C.F.R. § 720.3(v).

11. Respondent’s failure to submit a PMN at least ninety (90) days before manufacturing Chemical
    A constitutes a failure to comply with section 5 of TSCA, 15 U.S.C. § 2604, which is a prohibited act under section 15(1) of TSCA, 15 U.S.C. § 2614(1), and may subject an entity to civil penalties pursuant to section 16(a) of TSCA, 15 U.S.C. § 2615(a).

                          III. CIVIL PENALTY
    

12. To avoid the disruption of orderly business activities and the expense of protracted and costly
    litigation, both Parties agree that the penalty for any and all allegations discussed within this Consent Agreement is $ 29,688. The penalty is consistent with the TSCA ERP. The TSCA ERP was developed in accordance with the Guidelines for Assessment of Civil Penalties Under Section 16 of the Toxic Substances Control Act; PCB Penalty Policy, which sets forth a general penalty assessment policy for TSCA violations. 45 Fed. Reg. 59,770 (Sept. 10, 1980) (Penalty Policy). The TSCA ERP establishes a framework for applying the statutory factors to be considered in assessing a civil penalty, i.e.: “the nature, circumstances, extent and gravity of the violation or violations and, with respect to the violator, ability to pay, effect on ability to continue to do business, any history of prior such violations, the degree of culpability, and such other matters as justice may require.” 15 U.S.C. § 2615(a)(2)(B).

13. The agreed upon civil penalty in this case reflects: (1) a determination of the Gravity-based
    Penalty (GBP); and (2) adjustments to the GBP, taking into account the statutory factors.

14. Not more than thirty (30) calendar days after the effective date of the Final Order (“Effective
    Date”), Respondent shall pay the civil penalty and any interest, fees, and other charges due using any method, or combination of appropriate methods, as provided on EPA websites: https://www.epa.gov/financial/makepayment and https://www.epa.gov/financial/additional- instructions-making-payments-epa. These payment methods include the following:

A. Dispatch a cashier’s or certified check made payable to the order of the “Treasurer of the United States of America,” and bearing the Civil Penalty Docket No. “TSCA-HQ-2024- 5008” to the following address:

U.S. Environmental Protection Agency
Fines and Penalties
Docket No. TSCA-HQ-2024-5008
Cincinnati Finance Center
P.O. Box 979078
St. Louis, MO 63197-9000

OR

B. Pay by wire transfer with a notation of “Shepherd Chemical Company, Civil Penalty Docket No. TSCA-HQ-2024-5008” by using the following instructions:

Federal Reserve Bank of New York

ABA = 021030004

Account = 68010727

SWIFT address = FRNYUS33

33 Liberty Street

New York, NY 10045

Field Tag 4200 of the Fedwire message should read:
“D 68010727 Environmental Protection Agency”

15. Concurrently with Paragraph 14, Respondent shall forward a copy of the check or
    documentation of a wire transfer as a PDF attachment to Philip Milton at [email protected] or to the following address:

U.S. Environmental Protection Agency
Office of Civil Enforcement
Waste and Chemical Enforcement Division (2249A)
Attn: Philip Milton (Chemical Engineer)
1200 Pennsylvania Ave., NW
Washington, DC 20460
E-mail: [email protected]

By written notice to Respondent, EPA may change the address and/or person listed above.

16. No portion of the civil penalty or interest paid by Respondent pursuant to the requirements of
    this Consent Agreement shall be claimed by Respondent as a deduction for federal, state, or local income tax purposes.

17. Pursuant to 31 U.S.C. § 3717 and 40 C.F.R. § 13.11, unless otherwise prohibited by law, EPA
    will assess interest and late payment penalties on debts owed to the United States and a charge to cover the costs of processing and handling the delinquent claim. Interest on the civil penalty assessed in this CAFO will begin to accrue thirty (30) days after the Effective Date and will be recovered by EPA on any amount of the civil penalty that is not paid by the respective due date. In accordance with 31 U.S.C. § 3717 and 40 C.F.R. § 13.11, Respondent must pay the following amounts on any amount overdue:

a. Interest. Any unpaid portion of a civil penalty must bear interest at the rate established by the Secretary of the Treasury pursuant to 31 U.S.C. § 3717(a)(1). Interest will therefore begin to accrue on a civil penalty or stipulated penalty if it is not paid by the last date required. Interest will be assessed at the rate of the United States Treasury tax and loan rate in accordance with 40 C.F.R. § 13.11(a).

b. Monthly Handling Charge. Respondent must pay a late payment handling charge of FIFTEEN dollars ($15.00) on any late payment, with an additional charge of FIFTEEN dollars ($15.00) for each subsequent thirty (30) day period over which an unpaid balance remains.

c. Non-payment Penalty. On any portion of a civil penalty more than ninety (90) days past due, Respondent must pay a non-payment penalty charge of six percent (6%) per annum, which will accrue from the date the penalty payment became due and is not paid. 40 C.F.R. § 13.11(c). This non-payment penalty charge is in addition to charges which accrue or may accrue under subparagraphs (a) and (b).

                          IV. TERMS OF SETTLEMENT

18. Respondent’s full compliance with this Consent Agreement shall only resolve Respondent’s
    liability for federal civil penalties for the violations alleged in this Consent Agreement.

19. This settlement is conditioned upon the thoroughness and accuracy of Respondent’s
    submissions to EPA in this matter.

20. As a condition of this Consent Agreement, Respondent or its distributor may process, use, and
    distribute its existing stocks of Chemical A in accordance with the applicable terms and conditions of EPA’s TSCA §5 PMN review and determination, and Respondent submitting a notice of commencement pursuant to 40 C.F.R. § 720.102.

21. If the Respondent chooses to dispose of existing stocks, the Company shall dispose of any
    unused portion of its existing stocks of Chemical A in accordance with applicable federal and state requirements. The Company should coordinate with the applicable state(s) where disposal may occur to determine if additional requirements or a preferred approach (e.g., incineration) should be considered before disposing Chemical A.

22. Compliance with this CAFO shall not be a defense to any subsequent action EPA may
    commence pursuant to federal law or regulation for violations occurring after the date of this Consent Agreement, nor any violations of TSCA not alleged in this Consent Agreement that may have occurred prior to the date that this Consent Agreement is fully executed by both Parties.

23. Nothing in this Consent Agreement is intended to, nor shall be, construed to operate in any way
    to resolve any criminal liability of Respondent.

24. By executing this Consent Agreement, Respondent certifies that, to the best of its knowledge
    regarding the violations alleged herein, Respondent is in compliance with TSCA section 5, 15 U.S.C. § 2604.

                          V. OTHER MATTERS
    

25. Subject to the terms and conditions herein, this Consent Agreement shall be binding upon the
    Parties, and their respective officers, directors, employees, successors, and assigns. The undersigned representative of each Party certifies that he or she is duly authorized by his or her respective Party to enter into this binding Consent Agreement.

26. This Consent Agreement shall take full effect upon the signing and filing of the Final Order by
    the EPA’s Environmental Appeals Board (EAB).

27. This Consent Agreement may be amended or modified only by written agreement executed by
    both the EPA and Respondent.

28. Respondent’s obligations under this Consent Agreement shall end when it has paid in full the
    scheduled civil penalty, paid any stipulated penalties, and submitted documentation required by the Consent Agreement and Final Order.

29. All of the terms and conditions of this Consent Agreement together comprise one settlement
    agreement, and each of the terms and conditions is in consideration for all of the other terms and conditions. This Consent Agreement shall be null and void if any term or condition of this Consent Agreement is held invalid or is not executed by all of the signatory parties in identical form or is not approved in such identical form by the EAB.

30. Failure of Respondent to remit the civil penalties provided herein will result in this matter being
    forwarded to the United States Department of Justice for collection.

31. The Parties agree to bear their own costs and attorney’s fees.

                          WE HEREBY AGREE TO THIS:
    

For Respondent:

Lianne Mantione Date: 6/19/2024

Lianne Mantione
Counsel for Shepherd Chemical Company
Squire Patton Boggs (US) LLP
1000 Key Tower
127 Public Square
Cleveland, Ohio 44114

                          WE HEREBY AGREE TO THIS:

GREGORY SULLIVAN
Digitally signed by GREGORY SULLIVAN
Date: 2024.07.24
13:57:19 -04'00'

Gregory Sullivan, Director
Waste and Chemical Enforcement Division
Office of Civil Enforcement
Office of Enforcement and Compliance Assurance
United States Environmental Protection Agency

CATHERINE LEE
Digitally signed by CATHERINE LEE
Date: 2024.06.20 09:38:11
-04'00'

Catherine Lee, Attorney
Waste and Chemical Enforcement Division
Office of Civil Enforcement
Office of Enforcement and Compliance Assurance
United States Environmental Protection Agency

                          CERTIFICATE OF SERVICE

I certify that copies of the foregoing “Consent Agreement” and “Final Order,” in the matter of Shepherd Chemical Company, Docket No. TSCA-HQ-2024-5008, were sent to the following persons in the manner indicated:

By E-mail:

Catherine Lee, Attorney
Waste and Chemical Enforcement Division
Office of Civil Enforcement
Office of Enforcement and Compliance Assurance
U.S. Environmental Protection Agency
Washington, DC 20460
[email protected]

Lianne Mantione, Counsel for Shepherd Chemical Company
Squire Patton Boggs (US) LLP
1000 Key Tower
127 Public Square
Cleveland, OH 44114
[email protected]

Dated: Sep 27, 2024 Emilio Cortes
Emilio Cortes
Clerk of the Board